India's Mahindra & Mahindra starts talks for Pininfarina-designed car

  • Reuters
  • Stock Market News
India's Mahindra & Mahindra starts talks for Pininfarina-designed car
Credit: © Reuters.

By Aditi Shah and Sumeet Chatterjee

NOIDA/MUMBAI, Feb 5 (Reuters) - India's Mahindra & Mahindra Ltd MAHM.NS has begun talks with its new Italian design house, Pininfarina SpA PNNI.MI , to build a premium car for its home market, to counter a surge in competition in its mainstay sport utility vehicle (SUV) segment.

The country's biggest maker of SUVs and tractors will decide within the coming months on the type of car and timing of its release, likely some four years later, Executive Director Pawan Goenka told Reuters at the Delhi Auto Expo 2016 this week.

Group company Tech Mahindra Ltd TEML.NS agreed to buy the loss-making designer of Ferrari (N: RACE ), Maserati and Rolls Royce (L: RR ) cars in December, adding premium capability to a company known for more boxy, practical cars. deal came with Mahindra's domestic SUV market share hitting 37 percent in the 12 months through March from 48 percent two years earlier, industry data showed, as global rivals such as Ford Motor Co F.N , Renault SA RENA.PA and Hyundai Motor Co 005380.KS compete with sleeker models.

"Pininfarina can help Mahindra go to the next step in our effort to become global," Goenka said. "We want to leverage the brand, design and engineering expertise."

Mahindra showed off a concept three-door cross between a coupe and SUV at the motor show - the XUV Aero - built with input from Pininfarina. Depending on interest, Mahindra may sell the car priced from 2 million rupees ($29,560), Goenka said.

"We are looking to see how to design a product that has a Mahindra kind of heritage but a Pininfarina kind of design and styling."

Buying Pininfarina will help the Mahindra group garner more business beyond autos, such as air transport and consumer goods, said Jagdish Mitra, chief strategy and marketing officer at Tech Mahindra, whose clients include Hindustan Unilever Ltd HLL.NS and PepsiCo (N: PEP ) Inc PEP.N .

"We primarily work on the engineering side but tomorrow our opportunity lies in getting significantly involved in design," said Mitra.

Pininfarina would be the group's latest automotive purchase. It bought the majority of both South Korean automaker Ssangyong Motor Co Ltd 003620.KS in 2010 and the scooter business of France's Peugeot SA PEUP.PA last year - both of which, like Pininfarina, were losing money when the deals were agreed.

The acquisitions edged Mahindra closer to becoming a global automaker, giving it access to markets outside of India as well as to technology such as Ssangyong's petrol engines.

To date, however, both are still losing money.

($1 = 67.6600 Indian rupees)

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